[Opinion] Assessment Without Personal Hearing Invalid

Gopal Nathani – [2026] 188 taxmann.com 3 (Article)

Assessment proceedings often move slowly in their initial stages but accelerate dramatically as the statutory limitation period approaches. In practice, a substantial portion of assessment activity is compressed into the final quarter of the limitation period, which expires twelve months from the end of the relevant assessment year. Consequently, proceedings frequently reach a frantic pace during the closing days before limitation.
The faceless assessment scheme under section 144B of the Income-tax Act (corresponding to section 273 of the Income-tax Act, 2025) has added a new layer of procedural complexity. Every faceless assessment under section 144B(3) (new section 273) involves multiple authorities with distinct functional responsibilities. These include the National Faceless Assessment Centre (NFAC), which facilitates faceless assessment proceedings in a centralized manner; Assessment Units, which conduct the assessment; Verification Units, which undertake verification and enquiry; Technical Units, which provide assistance on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management and other technical matters; and Review Units, which review the proposed assessment.
Sub-section (5) further provides for communication among these units as well as between the NFAC and the taxpayer. In addition, sub-section (8) authorizes the NFAC to transfer the case to the Jurisdictional Assessing Officer (JAO) at any stage of the assessment proceedings.

This redistribution of assessment functions has inevitably increased the need for continuous coordination and communication among the various units while simultaneously ensuring effective interaction with the assessee. Although the faceless assessment scheme seeks to promote efficiency and transparency, the multiplicity of authorities often adds procedural complexity.
As the limitation period draws to a close, the NFAC, instead of acting as a facilitator, frequently attempts to complete the assessment within a compressed timeframe. It is not uncommon for all earlier submissions and explanations furnished by the assessee to be consolidated into a single show-cause notice issued only a few days before the limitation expires, requiring an immediate response. Such an approach hardly facilitates the assessment process. Rather, it places an undue burden on taxpayers, leaving them with insufficient time to examine the issues, collect supporting evidence and furnish an effective reply.

A similar situation arose in Pricewaterhouse Coopers (P.) Ltd. v. Assistant Commissioner of Income-tax [2026] 187 taxmann.com 981 (Calcutta) , decided on 25 June 2026 (“PWCPL”). The case was initially selected for scrutiny by an Assessment Unit of the National Faceless Assessment Centre (NFAC), which issued notices under section 142(1). The assessee duly furnished replies to those notices.

Subsequently, following a survey conducted under section 133A at the assessee’s business premises, the proceedings were transferred by the NFAC to the Jurisdictional Assessing Officer (JAO) under section 144B(8). The JAO thereafter issued further notices under section 142(1), to which the assessee again submitted replies. The transfer of proceedings and involvement of multiple authorities considerably increased the procedural complexity of this assessment.

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